"Japan's efforts to raise wages wane as firms embrace merit-based pay", 11 Feb 2020

More Japanese companies are shifting to merit-based pay as competition for workers heats up, but the change risks holding back the sort of blanket wage hikes the prime minister says are needed to inflate the economy.

Ahead of annual labor talks set for March 11, the momentum to agree broad wage rises is waning as the focus shifts to merit-based pay scales. Bellwether auto giant Toyota Motor Corp’s...labor union is no longer seeking blanket pay rises, likely prompting others to follow suit.

It could give Japanese firms the excuse not to boost overall labor benefits, with many wary of fixed costs as profits are seen squeezed by Sino-U.S. trade tensions, the new coronavirus outbreak and global slowdown.

For workers, the shift would boost salaries of younger workers and potentially widen the country’s wage gap.

Prime Minister Shinzo Abe’s government has been pushing for a more flexible labor market that would boost wages and revive consumption, but ironically, firms have also been asked to keep offering blanket pay rises...

The growing rank of low-paid workers has led unionists to prioritize addressing the income gap between permanent employees and low-paid workers, instead of a broad uniform pay raise...

But with less than one in five Japanese employees being union members, the bargaining power of unions has been on a steady decline, making annual talks more symbolic...

“Wage gaps among businesses and within the same company are getting wider and wider, making effects of wage talks unclear,” Shintaro Nakao, president of Pasona Inc, a human resources service company, told Reuters...

[Also refers to Fujitsu]